The Lemelson Foundation and E+Co partner to fund solar power in Africa

Published by KIM MARTIN Nov 2009

According to the 2010 World Energy Outlook, there are 1.4 billion people worldwide lacking access to electricity.  That is 15% of the world’s population has yet to own a light bulb, and relies almost exclusively on candles and kerosene for their lighting needs.  Tanzania, for example, is a country that is still very much in the dark with 86% of the population without access to electricity.   The low electrification rate has been identified by both the World Bank and the International Monetary Fund as one of Tanzania’s main infrastructural bottlenecks and an impediment to development and poverty reduction.[1]  In 2006, the Lemelson Foundation and E+Co, a non-profit clean energy investor, partnered to tackle this issue.

E+Co began working to bring alternate lighting options to Tanzania in 2001 when it provided support to Mona Mwanza Electrical and Electronics, an electrical supply company located in Tanzania’s second largest city, Mwanza.  The support, in the form of a loan, allowed the Company  to expand its retail business to include solar photovoltaic (PV) systems.  Several years later, Mohamed Parpia, a member of the family that established Mona Mwanza, launched a separate business, Zara Solar, a solar PV systems wholesaler in order to take advantage of the strong demand for solar PV systems available at Mona Mwanza. Today, Zara Solar has sold over 30,000 solar home systems to households and businesses, offset 1,826 tons of carbon, and displaced 254,306 liters of kerosene.  As a result of the impact of his work, Zara Solar received the International Ashden Award for Sustainable Energy prize in 2007, won the World Bank’s Lighting Africa competition in 2008, and won the Lighting Rural Tanzania competition in 2010.

In 2006, building upon the success of solar enterprises such as Zara Solar, E+Co and the Lemelson Foundation partnered to further expand the network of solar PV systems in Tanzania.  The Lemelson Foundation was interested in the connections between technology and sustainability, and saw an opportunity to fill gaps in the supply chain of solar systems distribution in Africa.  Out of the partnership, an investor model was created incorporating a mixed grant and program-related investment funding structure.  Anne Murray, Senior Development Officer at E+Co, said “the Lemelson Foundation program was designed to survive the ‘walk-away test’, i.e. create viable businesses that would continue to grow and succeed once the E+Co/Lemelson engagement ended.”  The grant supported the early-stage capacity development and training for solar PV entrepreneurs in Tanzania, and the program-related investment funded the launch and growth of their enterprises.   

Through 2008, E+Co used the Lemelson grant funding to hold five workshops in Tanzania bringing together over 100 PV operators, technicians, retailers, wholesalers, local savings banks, and market funders to evaluate opportunities in the Tanzanian solar sector.  Following the workshops, E+Co staff began providing business development and business planning support to entrepreneurs interested in launching solar PV enterprises, helping them create “bankable” business plans. Those plans were then funded using the Lemelson PRI, with seed capital being provided to five new solar PV enterprises, and growth capital to two existing enterprises.

One of those enterprises is Intra Professions East Africa Ltd.  The enterprise received a US $50,000 loan from E+Co to provide solar PV systems in regions in northern Tanzania.  Intra Professions recently won the “Lighting Rural Tanzania” competition, committing to provide solar PV systems to eight school districts in the Mwanza region.  Another investee is Bicco Solar, a sole proprietorship in the Mbeya region of southern Tanzania, a farming community in which 98% of the population lives without access to electricity.  Reduced income from poor harvests has slowed the organization’s growth, but Bicco Solar entrepreneur John Marko Mwakingili sees a brighter future for his community.  Bicco Solar is also a part of the solar PV value chain of investment, sourcing solar products from other E+Co investees in Tanzania.

Today, E+Co manages 13 active solar PV investments in Tanzania, has provided training and support services to more than 80 local entrepreneurs, and expects to continue investing in new solar enterprises.

According to Ms. Murray, “The Lemelson grant served not only to raise awareness in Tanzania for the opportunity in clean energy enterprise, but enabled E+Co and Lemelson to have solid, measurable, on-the-ground impact.  The combination of both grant and program-related investment support recognizes the full continuum of services and capital necessary for success, and allows funders to participate in the full value chain of enterprise development and investment.”

The Lemelson/E+Co partnership has done just that; created a great impact.  However, the fact remains that the electrification rate in Tanzania is abysmal at 11%.  This compares to the Sub-Saharan African (SSA) average of 29% and the SSA low-income average of 26%.  Challenges remain for unelectrified populations in Tanzania and other countries.  Lack of access to clean energy will continue to impede progress in economic development, poverty reduction, and climate change.  Needless to say, opportunities exist for funders hoping to bring about change in regions that need it most. 

To view the full interview with Anne Murray of E+Co, click here.